Remember the Point:Counterpoint routine on Saturday Night Live? It can be summed up by the quote: Jane, you ignorant slut!

I can’t help but think how out of sync Fed Chairman Ben Bernanke is with former Fed Chairman Alan Greenspan. Or is the former chairman out of sync with the current chairman? I am not really who is ignorant recognizing that both men are extremely smart. The photo of each precisely measures how important the housing market is as it relates to the economy.

October 7, 2006: Greenspan says…

Former Federal Reserve Chairman Alan Greenspan said that last week’s rise in weekly mortgage applications could signal that the “worst may well be over” for the U.S. housing industry, according to a report of a speech Greenspan gave in Canada on Friday.

Sounds like the the worst is over…

October 5, 2006: Bernanke says…

There is currently a substantial correction going on in the housing market,” Mr. Bernanke said. The decline in residential housing construction is one of the “major drags that is causing the economy to slow.

Or more pain is yet to come…

It would seem to me that the Greenspan era was a legacy of rapid asset appreciation (stocks and real estate) followed by asset corrections so I am not so sure why there remains so much concern placed on what Greenspan thinks. To his credit, Greenspan has been careful not to steal Bernanke’s thunder.

I think it comes down to public relations. Greenspan never stumbled in his public relations (not policy) during his tenure to my recollection. However, Bernanke has not been consistent as he relates his economic message on housing to the public.

The recent Bernanke speech felt more harsh than what he previously relayed so I am not sure whether to rely on the message. I hope Bernanke figures out a clear message soon. Greenspan is still sounding pretty good to the hopeful.

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One Response to “Point (Ben):Counterpoint (Alan)”

  1. frank says:

    1) Bernanke stated: “There is a ‘substantial correction’ underway in the housing sector . . . . but he predicts that solid underpinnings will limit the sector’s losses.” (Marketwatch).

    2) “Fed Vice Chairman Donald Kohn and Philadelphia Fed President Charles Plosser said they expect the economy to weather the decline in the housing . . .” (Bloomberg).

    3) And on Friday a lonesome cowboy in Calgary named Alan Greenspan “said that last week’s rise in weekly mortgage applications could signal that the ‘worst may well be over’ for the U.S. housing industry. . .” (Marketwatch)

    I don’t remember the last time I heard three different Fed governors plus His Eminence, the Oracle-of Oracles and Maestro-of All-He-Beholds deliver such an explicit message on a single sector of the economy, and all in a 3-day interval. Maybe they’re rehearsing for their debut as a barbershop quartet, or maybe — just maybe — they recognize that the implosion in the housing market constitutes a SYSTEMIC RISK to our financial house of cards.